Abuse of a dominant position occurs when a dominant

Excessive pricing

An undertaking in a dominant position shall not charge excessively high prices from its products. Generally speaking, the threshold for intervening with excessive pricing has been set relatively high, and it has often been typical of the cases that the costs used as a point of comparison for the pricing have been open to interpretation. Additionally, it has been found in domestic case-law in particular that the purpose of competition law is not the imposition of a specific price level i.e. price-regulation. Excessive pricing is often related to high entry barriers or barriers to expansion, because it is usually not possible for the undertakings to maintain an unreasonably high price level otherwise.
The assessment of excessive pricing can be made in two stages by first investigating the relation of the undertaking's income to the costs, and if this gives rise to further investigations, abuse may be stated for example by assessing the price level on an absolute level, in relation to the competing products in the same relevant market, or by using the pricing of another comparable relevant market as a gauging rod. The assessment of pricing on an absolute level may mean for example the comparison of the profitability of a dominant undertaking to the profitability of other undertakings. In the final assessment, the relation of pricing to the economic value of the product will also be taken into consideration.
Examples:
In the case United Brands (Case 27/76), the ECJ dismissed the Commission’s decision insofar as the Commission had found that United Brands had abused its dominant position by collecting excessively high prices for the Chiquita bananas in Germany, Denmark and the Benelux countries. The ECJ considered the Commission’s analysis and assessment of facts deficient and found that when excessive pricing is assessed, not only a price comparison but a detailed cost structure analysis is needed. In this context, the Commission had for the first time referred to the two-stage method of assessment of excessive pricing.
According to the Competition Council’s decision on Helsingin Energia (Dnro151/690/1999), the arguments presented by the FCA were not sufficient to prove that the case would have involved excessive pricing referred to in the Competition Act. The Competition Council found in its decision that it is not the main concern of the competition authorities to intervene with excessive pricing but instead to safeguard sound and effective economic competition primarily by removing any impediments to competition and hence securing the functioning of the market mechanism and the economic self-steering capacity of the market. The Competition Council further found that the its among the essential elements of excessive pricing referred to in the Competition Act that the prices collected by the undertaking concerned exceed the generally acceptable level.